Bessent Sees Stablecoin Market Growing 'Tenfold,' Helping Treasury Demand — Barrons.com
Karishma VanjaniTreasury Secretary Scott Bessent sees the stablecoin market growing to $3 trillion, adding to demand for the nation's debt.Demand and supply for U.S. debt have been a focal point for Wall Street strategists. The government needs to borrow to service the growing national debt, and less money is being raised because of corporate tax cuts. The White House says that tariffs will add to revenue, but the extent of the boost is highly speculative, especially as the fate of some of the administration's tariffs now rests in the hands of the Supreme Court.Bessent, in prepared remarks at the annual Treasury market conference on Wednesday, said the stablecoin market, which is currently valued around $300 billion, "could grow tenfold by the end of the decade" and add to demand for short-term government debt or Treasury bills.Stablecoins, a type of cryptocurrency, are designed to maintain a stable price relative to another asset such as the U.S. dollar. They must be backed by liquid assets, such as cash or Treasury debt, so issuance of more of the coins would create demand for Treasury securities.The growth is made possible by the Genius Act, which became law over the summer and encourages the adoption of such cryptocurrencies.Future demand for Treasuries will also come from the $7.5 trillion market for money-market funds, a big investor in Treasury bills, Bessent said. Overhauls that change how much capital banks must hold against relatively low-risk assets could further add to demand."As Treasury watches these trends play out, we will assess whether they are structural or temporary shifts. And we will adjust our long-term issuance plans accordingly," Bessent added.On Nov. 5, the Treasury said that it has begun to preliminarily consider future increases to the amount of issuance of long-term bonds. Still, it stuck with its prior communication that the sizes of longer-term debt it offers will stay stable "for at least the next several quarters."Bessent's statements on stablecoin are timely. Circle Internet Group said today that circulation of its stablecoin called USDC has more than doubled from a year ago. Circle's Chief Financial Officer Jeremy Fox-Geen told Barron's stablecoins are the beginning of a "megatrend" in the world of finance.Still the stock is down over 11%, in part because investors are worrying about the interest Circle earns from the reserves that back its stablecoin. As the Federal Reserve cut rates, that interest income declines as well.Write to Karishma Vanjani at [email protected] content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.